Lydiate, who was voted player of the tournament in last season's RBS 6 Nations Championship, went off just three minutes into Newport Gwent Dragons' RaboDirect PRO12 clash against Edinburgh at Rodney Parade on Friday.
The 24-year-old was unable to put any weight on his left leg, and BBC Sport Wales have reported that he is set to undergo surgery on Sunday.
Early indications are that he has suffered a fractured and dislocated ankle.
Wales kick off their four-Test autumn programme against Argentina on November 10, and there must also be doubts over his availability for the Six Nations in February and March.
Lydiate, meanwhile, is viewed as a strong Test team contender for the British and Irish Lions against Australia Down Under next summer.
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